A rough summary of transaction fees for the IoT with current systems.

We often talk about IOTA as the new distributed ledger that promises a financial and infrastructural solution in a world where fees for transactions act as a barrier to progress, especially in the IoT.

But how big are the present existing fees for a system like the IoT? Do we really have a problem?

I tried to find out! Very amateurish, I might add, but enough for this purpose.

Pre-conditions:

A bigger issue in estimating a none-existing number such as the “global-transaction-fee-index” is to find systems that are overall able to deliver the necessary services globally.

I take the liberty and define the “global-transaction-fee-index” as an indicator that shows the impact of the “mean fees” that would be added to a value transaction in the IoT.

The lower this index is, the worse it is for the IoT (shown with an example under “conclusion”).

This number is almost certainly utter bullshit but it gives us an idea how expensive and cumbersome transaction fees could be.

For my evaluation, I made a list of relevant requirements for present services:

the service needs to be fast (financial state of the art)

the service needs to be available almost everywhere (high adoption)

the service needs to be a commonly used technology right now (no proof of concept)

the service needs to be a system that is documented well enough to be assessed

This list supposedly isn’t complete but should be enough for this assessment.

For my calculations, I furthermore held to the very conservative estimate for the IoT-devices by Gartner of approximately 30 billion devices in 2020 (Source: Gartner)

We can assume that not every single device will be used for shifting values because a big piece of the pie will just be connected to submit data in any way.
But my relatively high estimation, especially because of new emerging e-markets, is still around ~5%.

This little assessment, therefore, starts with a number of 1.5 billion devices that need to shift value just once a week in 2020

I have no idea if this is close to reality but we have to start somewhere, so this acts as a reference.

If you find any serious, scientific approach to transaction fees in the IoT, I would be happy to get it somehow!

The services I found that held up to the requirements are no surprise:

Swift /wire transfer (globally active instead of national-remittance)
Paypal (most popular payment service – highest online adoption)
Visa (also a globally used service with access to markets everywhere on the planet)

Even Bitcoin would *only* generate fees about 1.125 billion Dollar per week if the scalability would stay at 75cents per transaction, which isn’t the case, sadly.
The scaling of Bitcoin would lead to much higher transaction fees due to the big number of 1.5 billion transactions per week. But I don’t know how much that would be and furthermore, Bitcoins adoption is not as advanced as the mentioned services. So this is irrelevant.

@TechCrunch Would love that for the cryptospace, together with a standard they had to accept like using primary sources, commentaries have to be marked as such and conflicts of interests should be marked at the beginning of an article. Crypto desperately needs a standard. #iota #btc #eth